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Growth In Tennessee’s Economy To Continue

KNOXVILLE, Tenn. — Tennessee’s monthly index of leading economic indicators is charting a steady course of growth through 1996, University of Tennessee economists said Tuesday.

But, cautioned UT economist Matt Murray, “there are some risk factors out there that could derail the economy as we move through the year.”

A continued downward trend in the stock market “could wreak havoc on business and consumer confidence and…bring the economy to its knees,” Murray said.

Another potential problem is a Federal Reserve increase in interest rates to override fears of inflation, he said.

“There seems to be a pessimism creeping over investors in recent weeks and a concern about inflation. As I’ve said repeatedly, I think those concerns are grossly overstated and unwarranted.”

Murray’s position was reinforced Tuesday when the Labor Department announced that, despite the biggest jump in food prices in three years, consumer prices overall edged up a mere 0.1 percent last month — an annual rate of only 3.5 percent and the best showing on inflation since November.

Fundamentals of the Tennessee and U.S. economies are solid, and “barring some unforeseen shock we should continue to enjoy economic growth through 1996,” he said.

The latest Tennessee index, based on April data, was the sixth monthly improvement, and Murray said that signals growth into early 1997. The index is a barometer of economic activity six to nine months into the future.